* Portuguese, Italian markets slide, weigh on Europe
* U.S. jobless claims better than expected
* Lumber Liquidators tumbles after revised outlook
* Indexes off: Dow 0.7 pct, S&P 0.7 pct, Nasdaq 0.9 pct
(Updates prices, adds comment)
By Rodrigo Campos
NEW YORK, July 10 U.S. stocks fell on Thursday
after the health of Portugal's top listed bank was questioned,
bringing back to markets the specter of a weakened Europe.
With U.S. stocks near record highs, the slide in Europe
translated into broad selling on Wall Street. Many market
participants have called for a pullback, with the steady S&P 500
yet to see a daily decline of 1 percent or more since April 10.
Espirito Santo Financial Group, the largest
shareholder in Portugal's Banco Espirito Santo,
suspended trading in its shares and bonds, citing "material
difficulties" at parent company ESI. Shares of the bank fell
17.2 percent. The S&P 500 financial sector fell 1.3
Portugal's benchmark stock index fell 3.8 percent
and Italy's FTSE MIB fell 2 percent. An index of
European bank shares was down 1.9 percent.
The Dow Jones industrial average fell 117.1 points or
0.69 percent, to 16,868.51, the S&P 500 lost 12.79 points
or 0.65 percent, to 1,960.04 and the Nasdaq Composite
dropped 41.37 points or 0.94 percent, to 4,377.67.
"In a world of global news, you can always find something
that is not doing well, whether it is political events in Iraq
or banking in Portugal," said Rick Meckler, president of
investment firm LibertyView Capital Management in Jersey City,
"The real test will be the earnings and that will either
give confidence to people to come back in or make them realize
the prices they have been paying are just too high."
Investors in Lumber Liquidators certainly thought
they were paying too much. Shares fell 21.5 percent to $55.31
after the hardwood flooring retailer cut its earnings outlook.
Sandwich chain Potbelly Corp estimated
second-quarter revenue and profit below analysts expectations
and its shares slid 24.2 percent to $11.10.
Declining issues outnumbered advancing ones on the NYSE by
2,257 to 604, for a 3.74-to-1 ratio on the downside. On the
Nasdaq, 2,167 issues fell and 340 rose for a 6.37-to-1 ratio
The CBOE Volatility Index hit its highest since May
20 before paring gains. The VIX last week hit 10.28, its lowest
level since early 2007, and was recently up 8.5 percent at
Earlier in the session, futures held on to steep losses
after data showed filings for new U.S. unemployment benefits
claims fell last week to one of the lowest levels since before
the 2007-09 recession.
In other data, U.S. wholesale inventories rose in May,
reinforcing the view that economic growth should surge in the
second quarter following a weak start to the year.
(Reporting by Rodrigo Campos, additional reporting by Chuck
Mikolajczak; Editing by Bernadette Baum and Nick Zieminski)